Recording Business Transactions: Journal Entries, Ledgers, Income Statement, and Profitability Prediction

This report covers the requirements for starting a business, the importance of accounting in decision-making, and the use of trend lines to predict profitability. It includes journal entries for transactions, ledgers, an income statement, and a profitability prediction for the upcoming year. The report also discusses the legal and financial aspects of starting a business and the stakeholders who require accounting information.

Recording Business
Transactions

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ASSESSMENT 1.............................................................................................................................1
Part A..........................................................................................................................................1
Part B...........................................................................................................................................2
Part C ..........................................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Recording business transaction is process of deciding what account will be influenced. In
the present working pattern flexibility is highly required which needs firm to give emphasis on
having relevant accounting procedure to have higher stabilized decision. The current report will
involve process of starting business. It will involve who are the decision maker of large listed
company on London stock exchange. The present study will include journal, leader and trail
balance. It will focus on formulating income statement and utilization of trend line for predicting
performance of upcoming period.
ASSESSMENT 1
Part A
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In order to establish business in UK as decorator there are few requirements which are needed
to be followed by enterprise in order to gain ability to become successful (Set up a business,
2021.). In the current era, competition in each industry has inclined which needs an enterprise to
focus on gaining significant competitive advantages so that accomplishing business objectives.
The one of the initial step is needed to be taken into consideration by organization which
is checking the that the idea chosen for operating in industry is legal or not. Investigating
legality is helpful in gaining accurate insights that business will obtain legal support in order to
proceed in smooth manner (Marshall, 2018). The another step which is crucial for specified
person to highlight is having business plan through deciding structure, strategy, policies,
choosing business name and address. Formulating funding & finance, promotional
strategy, having insurance, Registering with HM revenue and customer in turn higher
profitability can be derived.
For making appropriate functioning it is required to be pay attention on having much
focus on evaluating additional rules according to the prevailing type of business. While
starting the business it is important to focus on the other laws like customer protection,
employment law, etc in turn higher productivity and sustainability can be achieved.
David Green is looking to operate in decorating sector which needs to check how
effectively it can access to required resources. To become successful in the present working
condition the specified entrepreneur need to give emphasis on having larger innovative practices
in turn competitive edge can be derived (Rosanna, Hery and Widjaja, 2021). David Green need
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to follow the mentioned course of action for conducting its start up in the specified industry in
turn accomplishing predetermined objectives can become possible.
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Accounting is concerned with providing information through recording, analyzing and
summarizing business transaction. Sainsbury is one of large company that operates in retail
sector and has number of stakeholders. Each company has both internal and external
stakeholders who require sufficient information in turn formulating decision-making can become
possible (Darmayadi and et.al., 2021). There are some accounting experts which need to be
taken into consideration that involves accountant, financial analyst, assistance and general
managers in turn proper decision-making. There are several stakeholders who need proper
accounting information in turn formulating decision in turn higher accuracy & relevant
operational practices can become possible. In the present working environment internal
stakeholders of Sainsbury such as management, employees and owners in turn higher
productivity and stability can be derived (Derakhshan, Turner and Mancini, 2019). It can be
useful for the management to give emphasis on having relevant information from accounting
process in turn higher accuracy, relevant and efficiency in operational practices can become
possible.
From the provided information in form of statement it can be assessed that external
stakeholders are capable of taking sound decision. It comprises investors, financial analyst,
competitors, suppliers, financial institutions, etc those who tend to utilize the provided
information in turn making proper decision to invest, lend, etc can become possible (Imani,
Dehghani and Amiri, 2019). The given statement is indicating that proper formulation of
decision regarding business that collecting payments, liquidity position, credibility position, etc
related decision can become possible. From the provided information it can be articulated that
all the stakeholders uses accounting information for taking sound decision.
Part B
Journal entries for the transactions of September 2021 are enumerated below
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Date Particular Debit (in
£)
Credit
(in £)
1 Bad Debt A/C
To P Mullen
(Being bad debt recorded owed by P Mullen)
105
105
5 Syme Ltd A/C
To purchase return A/C
(being goods returned by Syme)
150
150
10 Cash a/c
Bad debt a/c
To M. Abel
(Being M. Abl declared bankrupt)
180
131
311
18 Machinery a/c
To cash
To bank
To Brown ltd
(being machinery purchased through cash, cheque
and credit)
1800
100
500
1200
26 Brown ltd a/c
To Bank a/c
(being half of debt paid by cheque)
600
600
28 Insurance A/C
Drawing a/c
To bank a/c
(being amount paid for insurance both business and
private)
60
70
130
Journal entries for the transactions of August 2021 in the books of ABC enterprises are as
follows:
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Date Particular Debit Credit
1 Bank a/c
To bank loan a/c
(being bank loan taken)
12400
12400
2 Cash a/c
To Bank a/c
(being amount transferred in cash)
2800
2800
3 Van a/c
To Bank a/c
(being second hand van purchased and paid by
cheque)
6200
6200
4 Office fixtures
To bank
To Sharp Office ltd
(Being office fixtures purchased on cash & credit
basis)
3400
1000
2400
8 Van a/c
To Toyota Co
(Being van purchased on credit)
8700
8700
15 Office fixtures
To cash
(being office fixtures purchased)
110
110
19 Toyota co
To bank
(being amount paid to Toyota by cheque)
8700
8700
25 Bank a/c
To cash
(being cash deposited in bank)
430
430
28 Office fixtures
To bank a/c
750
750
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(being office fixtures purchased by cheque)
a.
Ledgers of Maurice & brothers
Sharp office Ltd Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
4-Aug by office fixtures 2400
31-Aug To bal c/d 2400
Total 2400 2400
Toyota Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
19-Aug to bank 8700 8-Aug by van 8700
8700 8700
Bank Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
1-Aug Bank loan 12400 2-Aug By cash 2800
25-Aug To cash 430 3-Aug By van 6200
31-Aug To bal c/d 6620 4-Aug By office fixtures 1000
19-Aug By Toyota Co. 8700
28-Aug By office fixtures 750
Total 19450 19450
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Office fixtures Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
4-Aug to bank 1000
4-Aug to sharp office 2400 31-Aug by bal c/d 4260
15-Aug to cash 110
28-Aug to bank 750
Total 4260 4260
Bank loan Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
31-Aug To bal c/d 12400 1-Aug By Bank 12400
12400 12400
Cash Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
2-Aug to bank 2800 8-Aug by office fixtures 110
25-Aug by bank 430
31-Aug by bl c/d 2260
Total 2800 2800
'
Van Account
Dr. Cr.
Date Particulars Amount (in £) Date Particular Amount (in £)
3-Aug to bank 6200 31-Aug by bal c/d 14900
8-Aug to Toyota 8700
Total 14900 14900
b.
6

Trial balance of ABC Enterprise as at 31 August 2021
Particulars Debit side
Figures (in £)
Credit side
Figures (in £)
Bank 6620
Bank loan 12400
Cash 2260
Van 14900
Office fixtures 4260
Sharp office 2400
Total 21420 21420
Part C
a
Income Statement for B Moore for the year ending 30th
September 2021
Particulars Figures
( in £)
Figures
( in £)
Sales 95,000
Return inwards (Sales Returns) 3,500
91,500
COGS 114,280
Carriage inwards 890
Gross Loss -23,670
Carriage outwards 500
Motor expenses 1,400
Rent 7,000
Telephone charges 830
Wages and salaries 14,000
Insurance 1030
Office expenses 800
Sundry expenses 250 25810
Net loss 49,480
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Working note:
COGS= opening inventory+ purchase- closing stock
Inventory (30september 2020) =18000
Add: Purcahse- returns outwards =720
Less: Closing stock = 13,000
COGS=114,280
b Predicating h B more's profiatbilirty for the year 2022
from teh evalaution of rpovided information it can be specified that teh organization is
facing fluctuating trend from the period 2013-2020. in teh intial presented year from teh period
2013 to 20156 there si upwards movement of growth and development as profiatbility is
increasing trend. It is increasing froim the amount 55800 to 85500 which is presenting leading
financial health.
From the year 2016- 2020 which is fluctuating trend due to incarese and decease in
profiatbility which is indicating performance of firm is not stable (Wang and Kogan, 2018).
The specified requiremnt of teh enterprise of predicting profitability of company can be
determined by applying trendline technqiue.
Year Equation
Y (2022) 1326x+121793
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1326(9)+12793
11934 +12793
2022 (net
profitability)
24727
On the basis of this, it can be articulated that profitability of particular organization for
the specified organization possessing positive outcome which is leading to success. It is
reflecting positive trend of growth and development.
CONCLUSION
From the above report it can be summarized that recording business transaction is crucial
for having depth insights about company's processing. The current report has involved
information regarding set for starting business as decorator. Utilization of accounting in decision
formulation is done by various stakeholders. The current study has given emphasis on gaining
information regarding predicting profitability for upcoming year through using trend line.
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REFERENCES
Books and Journals
Darmayadi, A. and et.al., 2021. Information System for Transaction Activities in a
Company. International Journal of Education, Information Technology, and Others. 4(3).
pp.338-344.
Derakhshan, R., Turner, R. and Mancini, M., 2019. Project governance and stakeholders: a
literature review. International Journal of Project Management. 37(1). pp.98-116.
Imani, S., Dehghani, N. and Amiri, N. S., 2019. Branding: Internal and External Stakeholders.
In Contemporary Issues in Branding (pp. 173-198). Routledge.
Marshall, S.J., 2018. Internal and external stakeholders in higher education. In Shaping the
University of the Future (pp. 77-102). Springer, Singapore.
Rosanna, N., Hery, H. and Widjaja, A.E., 2021. Designing Information Systems for Transaction
and Production Data Management A&N convection. IAIC Transactions on Sustainable
Digital Innovation (ITSDI). 2(2). pp.121-130.
Wang, Y. and Kogan, A., 2018. Designing confidentiality-preserving Blockchain-based
transaction processing systems. International Journal of Accounting Information Systems.
30. pp.1-18.
Online
Set up a business. 2021. [Online]. Available through: <https://www.gov.uk/set-up-business/>.
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